Leidos Inc.
Highlights
Leidos, Inc., of Reston, Virginia, protests the issuance of a task order to Amentum Services, Inc., of Germantown, Maryland, under request for proposals (RFP) No. 47QFWA22R0013, issued by the General Services Administration (GSA) to acquire, on behalf of the Department of the Army, support services in connection with development, integration and testing of prototype systems for command, control, communications, computers, intelligence, surveillance and reconnaissance systems to be deployed on various weapons systems. Leidos argues that the agency misevaluated proposals and made an unreasonable source selection decision.
DOCUMENT FOR PUBLIC RELEASE
The decision issued on the date below was subject to a GAO Protective Order. This redacted version has been approved for public release.
Decision
Matter of: Leidos Inc.
File: B-421476.4; B-421476.5
Date: July 19, 2023
J. Scott Hommer, III, Esq., Emily R. Marcy, Esq., Rebecca E. Pearson, Esq., Christopher Griesedieck, Esq., and Lindsay M. Reed, Esq., Venable LLP, for the protester.
Jason A. Carey, Esq., J. Hunter Bennett, Esq., Andrew R. Guy, Esq., Jennifer K. Bentley, Esq., and Emma Merrill-Grubb, Esq., Covington & Burling, LLP, for the intervenor.
Kathryn M. Navin, Esq., General Services Administation, for the agency.
Scott H. Riback, Esq., and Tania Calhoun, Esq., Office of the General Counsel, GAO, participated in the preparation of the decision.
DIGEST
Protest challenging agency’s evaluation of proposals and source selection decision is denied where record shows that the agency’s evaluation and source selection was reasonable and consistent with the terms of the solicitation and applicable statutes and regulations.
DECISION
Leidos, Inc., of Reston, Virginia, protests the issuance of a task order to Amentum Services, Inc., of Germantown, Maryland, under request for proposals (RFP) No. 47QFWA22R0013, issued by the General Services Administration (GSA) to acquire, on behalf of the Department of the Army, support services in connection with development, integration and testing of prototype systems for command, control, communications, computers, intelligence, surveillance and reconnaissance systems to be deployed on various weapons systems. Leidos argues that the agency misevaluated proposals and made an unreasonable source selection decision.
We deny the protest.
BACKGROUND
This is Leidos’s second protest in connection with the agency’s issuance of a task order to Amentum under this solicitation. In response to Leidos’s first protest (which Leidos supplemented twice, and which raised various challenges to the agency’s evaluation of proposals and earlier source selection decision), the agency took corrective action before the deadline for submission of the agency report. We dismissed the protest as academic. Leidos, Inc., B-421476, et al., Mar. 21, 2023 (unpublished decision).
The agency subsequently reevaluated proposals and made a new source selection, again selecting Amentum for issuance of the task order. That reevaluation and selection decision are the subject of the current protest.
The RFP contemplates the issuance, on a base-value tradeoff basis, of a fixed-price task order for a base year and four 1-year options. RFP at 5.[1] Firms were advised that proposals would be evaluated considering price and two non-price factors, previous experience (deemed most important) and technical and management approach.[2] RFP at 37. The RFP further advised that the two non-price factors together were deemed significantly more important than price, but that as proposals were determined comparatively closer together in technical merit, price would increase in importance. Id. The RFP provided that the agency would evaluate price for fairness and reasonableness, and also for realism.
The agency received three proposals in response to the solicitation. Based on an evaluation of those proposals, the agency initially selected Amentum for issuance of the task order in January 2023. Leidos requested a debriefing from the agency and, in the course of that debriefing, the agency determined that a reevaluation of proposals and a new source selection were required to make corrections to the initial evaluation.
The agency performed that reevaluation and again selected Amentum in February. Leidos received a second debriefing from the agency and filed a protest with our Office alleging various improprieties with the agency’s evaluation and source selection. As noted above, the agency elected to take corrective action in response to that protest, which we subsequently dismissed as academic.
Thereafter, the agency reevaluated the Amentum and Leidos proposals a second time. Based on that reevaluation, both firms’ proposals received adjectival ratings of very good under both the previous experience and technical and management approach factors, and both firms’ prices (Leidos’s price was $364,971,509 and Amentum’s price was $325,907,369) were determined to be both realistic and reasonable. AR, Exh. 12, Source Selection Decision Document (SSDD), at 39-40.
The agency determined that the proposals were largely technically equivalent, with a minor advantage accruing to the Leidos proposal because the transition period from the prior task order to the current one would be reduced by virtue of Leidos’s incumbency, and also because selection of Leidos would ensure a “traditionally high” retention rate of incumbent personnel. AR, Exh. 12, SSDD, at 42-43. Ultimately, the agency concluded that the minimal superiority of the Leidos proposal was not worth its associated price premium, and Amentum’s proposal was again selected for issuance of the task order. Id. at 43. After being advised of the agency’s source selection decision and requesting and receiving a debriefing, Leidos filed the instant protest.[3]
DISCUSSION[4]
Leidos challenges the agency’s evaluation of proposals and source selection decision. The protest focuses principally on the agency’s evaluation of proposals for price realism purposes, and also raises an issue relating to the agency’s evaluation of non-price proposals.[5] We have considered all of Leidos’s allegations and deny the protest.
Price Realism Evaluation
Leidos challenges the agency’s evaluation of the Amentum proposal for purposes of determining whether its offered prices were realistic. Leidos makes various arguments in connection with its challenge to the agency’s evaluation, and we find no merit to any of its assertions. We discuss Leidos’s principal allegations below.
We note at the outset that, where a solicitation provides for the evaluation of prices for realism purposes, an agency may conduct a price realism analysis for the limited purposes of assessing whether an offeror’s low price reflects a lack of technical understanding or performance risk. Federal Acquisition Regulation (FAR) 15.404‑1(d)(3); NextGen Federal Systems, LLC, B-420456, B-420456.2, Apr. 14, 2022, 2022 CPD ¶ 99 at 8. Although the FAR identifies permissible price analysis techniques, it does not mandate any particular approach; thus, the nature and extent of an agency’s price realism analysis are matters within the agency’s discretion. NextGen Federal Systems, LLC, supra. Our review of a price realism analysis is limited to determining whether it was reasonable and consistent with the terms of the solicitation, and a protester’s disagreement with the nature and extent of an agency’s price realism methodology does not provide a basis to sustain a protest. Id.
Amentum’s Technical Approach
Leidos argues that the agency’s price realism evaluation failed to consider Amentum’s unique technical approach to staffing the task order. According to Leidos, Amentum proposed to capture the incumbent staff in connection with performance of the task order, and Leidos, the incumbent contractor, claims that Amentum did not propose hourly rates that are adequately high to attract the incumbent workforce.
We deny this aspect of Leidos’s protest. As an initial matter, we point out that the RFP dictated the staffing profile necessary to perform the requirement, and offerors were left without any discretion in terms of proposing unique or differing technical approaches to staffing. Specifically, the RFP included a pricing worksheet that identified the labor categories, number of hours per labor category, the number of full-time equivalent staff per labor category, and the total level of effort required to perform the task order. RFP, Appendix A, Pricing Worksheet.[6] Accordingly, there is no basis to conclude that Amentum proposed a “unique” staffing profile that differed in any material way from the staffing profile proposed by Leidos, and required by the RFP.
The record also does not support Leidos’s assertion that the agency had to consider Amentum’s proposal for “incumbent capture” in connection with its price realism evaluation. Specifically, a review of the Amentum proposal shows that, while the firm made reference to recruiting incumbent personnel, it proposed a multi-pronged approach to fulfilling the staffing requirements dictated by the RFP. Amentum’s proposal describes its approach as follows:
Our approach to hiring qualified personnel and staffing all PWS [performance work statement] requirements is based upon Amentum’s holistic [deleted] approach. [deleted] includes tailored processes and tools, used in partnership with our teammates, to qualify and staff a skilled workforce. It comprises key elements, including our (1) [deleted] to prioritize recruiting efforts, (2) [deleted], and (3) [deleted].
AR, Exh. 6, Amentum Technical and Management Approach Proposal, at 7. Amentum;s proposal goes on to explain each element its “[deleted]” approach to meeting the requirement:
[1] The [deleted] includes [deleted] to focus on critical qualified staffing. [2] Our [deleted][7] is an [deleted] that provides [deleted] sourcing of qualified candidates for all positions to reduce TTF [time to fill] rates. We do this through [deleted]. [3] Our [deleted] proactively supports [deleted] and informs recruiting priorities based on [deleted].
Id .[8]
The Amentum proposal made no representation regarding the percentage of incumbent staff it intended to recruit or retain, and no representations regarding how incumbent retention would affect its staffing of the requirement, and by extension how incumbent retention would lead to successful performance of the task order.
In light of the foregoing, we have no basis to find that the agency was required to consider Amentum’s “unique” staffing approach. The staffing profile necessary to perform the requirement was dictated by the agency, and Amentum made no representations about the extent to which its proposed approach depended or relied upon successful recruitment of any particular incumbent personnel. See Trilogy Federal, LLC, B-418461.11, B-418461.18, Feb. 23, 2021, 2021 CPD ¶ 144 at 9 (where a solicitation includes the labor categories, and hours that offerors are required to use to prepare their proposals, the agency may reasonably perform its price realism analysis by determining if the proposed rates are realistic without additional analysis). In light of the foregoing, we have no basis to object to the reasonableness of the agency’s price realism evaluation based on any alleged failure of the agency to consider Amentum’s technical approach.
Evaluation of the Offerors’ Labor Rates
Leidos also challenges the methods used by the agency to evaluate the realism of the offerors’ proposed labor rates. In this connection, the record shows that the agency’s evaluation considered the realism of labor rates that were subject to the Service Contract Labor Standards (SCLS) and, separately, those that were exempt from the SCLS.
With respect to those labor categories subject to the SCLS, the record shows that the agency compared the offerors’ proposed labor rates to a sample of the SCLS labor rates to determine whether those rates were realistic. AR, Exh. 12, SSDD, at 31-34. In performing this exercise, the agency took the direct labor rate for each category (the SCLS wage rate determination provides only direct labor rates) and added $4.80 to each rate to account for health and welfare benefits.[9] Id.
Based on this comparison, the agency determined that Amentum and Leidos had proposed to pay labor rates that exceeded the figure calculated by the agency (the agency determined that Amentum’s proposed rates exceeded the agency’s calculated rates by between $[deleted] and $[deleted] per hour for the sampled categories, while Leidos’s proposed rates exceeded the agency’s calculated rates by between $[deleted] and $[deleted] per hour for the sampled categories). Id. The contracting officer explains that it was assumed that the amount by which each vendor’s rates exceeded the SCLS wage rates plus $4.80 per hour for health and welfare benefits amounted to the additional, indirect costs applied by the vendors to their direct labor rates. Contracting Officer’s Statement of Fact at 33-34.
Leidos takes issue with the agency’s comparison of the SCLS wage rates to the offerors’ proposed wage rates on the basis that it amounts to what Leidos characterizes as an “apples-to-oranges” comparison because the SCLS rates do not account for the offerors’ indirect rates or profit. Leidos presents various calculations that it has made which it claims demonstrate that Amentum’s actual direct labor rates are below SCLS wage rates for some [deleted] percent of the SCLS labor categories. Leidos therefore maintains that Amentum’s hourly rates for these labor categories are unrealistic.
Leidos’s challenge presents no basis for our Office to question the reasonableness of the agency’s evaluation of Amentum’s proposed SCLS wage rates for realism. Although Leidos claims to have arrived at what it maintains are Amentum’s “true” direct labor rates, the RFP here solicited only fully burdened hourly rates, and offerors were not required to provide the agency with any information about the composition of their respective fully burdened labor rates. Leidos’s calculations amount to no more than guesswork on the part of the protester based on information that neither it, nor the agency, possesses.
In any event, this aspect of the agency’s price realism evaluation was only meant to provide the agency with what amounted to a broad yardstick against which to measure the realism of the offerors’ proposed fixed prices. Even under the more rigorous standard applicable to performing a cost realism evaluation (where, for example, an agency may actually have information about the composition of fully burdened rates), agencies are not required to conduct an in-depth analysis or verify each and every item to a scientific certainty. Sierra Nevada Corporation, B-410485, et al., Jan. 5, 2015, 2015 CPD ¶ 23 at 15 (price realism evaluation need not verify each and every item to a scientific certainty). Rather, the methodology employed need only be reasonably adequate and provide some measure of confidence that the proposal is realistic in view of the information available to the agency at the time of its evaluation. Id. The agency’s evaluation of the proposed SCLS wage rates here meets that standard, and Leidos’s protest provides no basis for our Office to question the reasonableness of the agency’s evaluation of the proposed SCLS wage rates.
With respect to the agency’s evaluation of the offerors’ proposed non-SCLS wage rates, the record shows that the agency employed the PET Resource Tool.[10] Using that tool, the agency identified the applicable OASIS labor categories to use in its analysis and “cross-walked” those categories to Bureau of Labor Statistics (BLS) standardized labor categories. Once the agency identified the applicable labor categories, the agency used the 10th percentile wage rate stipulated in the BLS salary data for the geographic location where performance of the task order will occur.
The agency then escalated those rates to arrive at 2022 wage rates, and multiplied by a stipulated factor of 175 percent[11] to adjust the rates to include indirect rates. The agency then calculated estimated fully burdened hourly rates for the solicitation’s most junior labor categories. Using these rates as a floor or baseline, the agency compared the proposed rates for the junior labor categories, and also examined the more senior labor categories to determine whether those labor categories were priced at rates higher than the junior rates. AR, Exh. 12, SSDD, at 34-36.
Based on this exercise, the agency concluded that [deleted] percent of Amentum’s proposed hourly rates fell below the thresholds established, and [deleted] percent of Leidos’s proposed rates fell below the established thresholds. AR, Exh. 12, SSDD, at 34-36. On the basis of these results, the agency concluded that both firms proposed rates that were realistic for the non-SCLS labor categories.
Leidos argues that the agency’s evaluation of the non-SCLS wage rates was unreasonable because it was based on the 10th percentile wage rate rather than higher percentiles. Leidos argues that the agency should have used the 50th percentile for junior-level positions, and correspondingly higher percentiles (the 75th and 90th percentiles respectively) for journeyman-level and senior-level positions. According to Leidos, this would have shown that Amentum’s proposed rates for the non-SCLS positions were unrealistically low.
We find no merit to this aspect of Leidos’s protest. As noted above, the agency used the 10th percentile essentially as a floor against which to measure the realism of the proposed rates. Using that method, the agency determined that even Leidos had proposed a certain percentage of its wage rates ([deleted] percent) that were deemed unrealistic.
The agency also prepared for illustrative purposes a comparison of Leidos’s proposed wage rates to rates recalculated from the PET Resource Tool based on the percentiles that Leidos argues should have been used (the 50th percentile for junior-level positions, the 75th percentile for journeyman-level positions and the 90th percentile for senior-level positions). That recalculated comparison shows that, for more than [deleted] percent of Leidos’s proposed wage rates ([deleted] of the [deleted] sampled wage rates), Leidos’s proposed rates would have been determined unrealistic. Contracting Officer’s Statement of Facts at 67-69. And while it is necessarily true that such a recalculation for Amentum also would have shown that many of its proposed rates were unrealistic, the recalculation performed by the agency illustrates the fundamental unreasonableness of Leidos’s position.
Again, price realism evaluations need not verify each and every item to a scientific certainty, and need only provide some measure of confidence that the proposal is realistic. Sierra Nevada Corporation, supra. The agency’s evaluation here meets this standard. Consequently, we find no merit to this aspect of Leidos’s protest.
Leidos’s Remaining Price Evaluation Arguments
Leidos makes several additional arguments relating to the agency’s evaluation of the offerors’ prices. We have considered these remaining allegations and find no merit to any of them. We discuss one for illustrative purposes.
Leidos argues that the agency failed to evaluate the fact that Amentum did not propose a direct material handling rate and instead proposed what it describes as an unrealistically low indirect material handling rate.
The RFP did not require--but did permit--offerors to propose a direct material handling rate, RFP at 11, and Amentum elected not to propose a direct material handling rate. Instead, Amentum proposed an indirect material handling rate.[12] AR, Exh. 6, Amentum Price Proposal, at 2. The record shows that the agency evaluated Amentum’s indirect material handling rate and found it realistic by comparing it to the indirect material handling rate found in the Defense Contract Management Agency’s forward pricing rate recommendations for Amentum for 2023 (Amentum’s proposed indirect material handling rate for the task order was [deleted] percent, while the rate found in Amentum’s forward pricing rate recommendation ranged between [deleted] and [deleted] percent). AR, Exh. 12, SSDD, at 37. We have no basis to conclude that the agency’s finding here unreasonable.
In sum, we have no basis to object to the agency’s evaluation of proposals for price realism based on any of the arguments advanced by Leidos. We therefore deny this aspect of its protest.
Technical Evaluation
Leidos raises a single challenge to the agency’s evaluation of proposals under the technical and management factor, and raises no challenges to the agency’s evaluation of proposals under the previous experience factor. In considering protests challenging an agency's evaluation of proposals, our Office does not reevaluate proposals or substitute our judgment for that of the agency; rather, we review the record to ensure that the agency's evaluation is reasonable and consistent with the terms of the solicitation and applicable statutes and regulations. Comprehensive Health Services, LLC, B-421108.4, B-421108.5, May 17, 2023, 2023 CPD ¶ 126 at 3.
Leidos argues that the agency erred in assigning a strength to the Amentum proposal for its capabilities in connection with the use of a software tool known as [deleted], while also assigning the Leidos a strength for the same feature. According to Leidos, this was unreasonable because it is currently using [deleted] to perform the solicited requirement, while Amentum merely represented that it has had preliminary contact with the [deleted] representatives in anticipation of deploying the system during contract performance.
The record shows that the agency understood Amentum’s capabilities in connection with the use of [deleted], and assigned it a strength based on its use of the software on other contracts, and its anticipated use of the software for the solicited requirement. The agency found as follows:
Amentum indicates, under Task 7, that it currently uses [deleted] for [deleted], and Task 5 indicates that it will use [deleted] for [deleted] and that it has already had preliminary discussions with [deleted] representatives for integrating it into its [deleted] and [deleted] [proprietary Amentum] systems to align with the [requirements]. . . . Amentum’s current use and familiarity with [deleted] is an aspect of its quote that, when judged against a stated evaluation criterion, enhances the merit of the quote or increases the probability of successful performance of the task order, because this familiarity will decrease the anticipated transition-in time for Amentum, which reduces government effort and accelerates project timelines.
AR, Exh. 12, SSDD, at 14.
In contrast, when evaluating the Leidos proposal, the agency assigned it a strength for actually using the [deleted] system in performing the incumbent contract. AR, Exh. 12, SSDD, at 22. The record therefore shows that the agency understood the distinction between the two proposals (and the offerors’ respective understanding and use of the [deleted] software product) and assigned strengths based on the firms’ differing use and understanding of [deleted]. We therefore find no merit to this aspect of Leidos’s protest.
The protest is denied.
Edda Emmanuelli Perez
General Counsel
[1] All citations to the RFP are to a version of the solicitation conformed through amendment No. 0005, provided by the agency in its report. Agency Report (AR) Exh. 4, Final RFP.
[2] The agency assigned adjectival ratings under the previous experience and technical and management approach factors of excellent, very good, acceptable, marginal or unacceptable. AR, Exh. 7, Evaluation Plan, at 8.
[3] The agency advised Leidos of its selection decision by letter dated April 10, which included information relating to the evaluation of the Leidos proposal and the agency’s source selection decision, and also advised Leidos of its opportunity to obtain additional information about the agency’s evaluation and source selection through a debriefing Leidos Initial Protest, Exh. 13, Unsuccessful Offeror Notice. Leidos requested a debriefing in response to that letter. In this connection, the agency advised Leidos (and all other offerors) that it intended to use its in-depth feedback through open reporting methods (INFORM) debriefing procedures when providing Leidos with its debriefing. Id.; RFP at 43-45.
Leidos filed its initial protest with our Office on April 17, and asked us to provide clarification concerning our views relating to the timely filing of a protest in relation to GSA’s INFORM debriefing procedures. However, because Leidos’s protest was filed within 10 days of its being notified of the agency’s selection decision, its protest was timely regardless of GSA’s use of the INFORM debriefing procedure. 4 C.F.R. § 21.2(a)(2). The protest essentially asks us to decide a hypothetical question which we need not address based on the facts of this case.
[4] The competition for this requirement was confined to firms holding contracts under GSA’s unrestricted pool 3 One Acquisition Solution for Integration Services (OASIS) indefinite-delivery, indefinite-quantity contract (IDIQ) program. Because the value of the protested task order is in excess of $10 million, this protest is within our jurisdiction to hear protests of task orders placed under civilian agency IDIQ contracts. 41 U.S.C. § 4106(f)(1)(B).
[5] In its initial protest, Leidos argued that the contracting officer made changes to the evaluation of technical proposals under both non-price evaluation factors that deviated from the findings of the evaluators without explaining his actions. The agency provided a detailed response to this aspect of Leidos’s protest. In its comments responding to the agency report, Leidos essentially restated this protest allegation without elaboration. Under the circumstances, we deem this aspect of Leidos’s protest abandoned. Avaya Government Solutions, Inc., B-409037, B-409037.2, Jan. 15, 2014, 2014 CPD ¶ 31 at 4 (where protester either does not respond to the agency’s position or provides a response that merely references or restates the original allegation without substantively rebutting the agency’s position, we deem the originally-raised allegation abandoned).
[6] The RFP also specifically provided as follows:
Proposed alternative solutions will not be considered. Offerors must propose the exact mix of labor categories and hours in Appendix A requirement. Any deviations from the Government-estimated labor categories and labor hours listed above may render the offeror's proposal unacceptable, and it may no longer be considered for award.
RFP at 33.
[7] Elsewhere in its proposal, Amentum describes its “[deleted]” as one designed to ensure that the firm maintains [deleted]. AR, Exh. 6, Amentum Technical and Management Proposal, at ES3.
[8] Amentum’s proposal also expressly recognized that the staffing requirements for performance were dictated by the RFP, noting that its staffing approach was based on the “government-provided labor mix.” AR, Exh. 6, Amentum Technical and Management Approach Proposal, at 7.
[9] The SCLS wage rate determination applicable to the solicited requirement stipulates that employees subject to the wage rate determination are entitled to health and welfare benefits of $4.80 per hour. AR, Exh. 4, Appendix H, SCLS Wage Rate Determination, at 9.
[10] In its initial protest, Leidos argued that the agency had used the OASIS Price Evaluation Tool, which had been decommissioned in April 2022. The agency explained in its report that it did not use this tool, but instead used the PET Resource Tool which is to be used in lieu of the OASIS Price Evaluation Tool. AR, Exh. 10, PET Resource Tool Workbook, Instructions Page. The PET Resource Tool is an interactive excel workbook that allows the user to obtain accurate wage rate data.
[11] The PET Resource Tool stipulates three possible indirect burden rates, 175 percent, 225 percent and 250 percent. AR, Exh. 10, PET Resoirce Tool, Rate Calculator Example Worksheet. The agency states that it used the low figure--175 percent--because it was evaluating prices for realism.
[12] The RFP advised offerors that “material” “hardware” and “other direct costs” were anticipated to be incurred in connection with performance of the requirement, and included annual estimates--essentially plug numbers for those costs that would be converted into ceiling amounts to be used during performance--for firms to use in connection with preparing their proposals (all firms used the same plug numbers for these costs in preparing their proposals). RFP at 3, 11. The RFP also advised that firms could, at their discretion, propose a materials handling “rate” that would be fixed for the life of the contract. RFP at 11. The RFP stated that the cost associated with any proposed materials handling rate would be included within the overall ceiling amount dictated by the RFP. RFP at 11.